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UK-Ukraine Digital Trade Agreement – Summary

authors: FTI Consulting, the UK member of WTS Global

29 December, 2022 Newsletters

Context

Agreement in Principle on the UK-Ukraine Digital Trade Agreement (DTA) was announced on 30 November 2022. Negotiated as part of the UK Government’s ongoing support for Ukraine, the DTA seeks to enable the reconstruction of Ukraine’s economy, and deepen the economic links between both countries.

This is the first such agreement Ukraine has signed; for the UK, it is the second, following agreement on the UK-Singapore Digital Economy Agreement (DEA) in June, seen as the most advanced agreement on digital trading rules ever agreed. The UK-Ukraine DTA is expected to cover the same issues as the agreement with Singapore, which was welcomed by industry of both countries, particularly in tech and financial services. The legal framework of the DTA will make it easier for businesses in the UK and Ukraine to freely trade digitally with each other, for example by preventing forced data localisation or transfer of proprietary source code.

Benefits arising from the UK’s previous digital trade agreement

As the UK-Ukraine DTA will provide commitments between both countries similar to the UK-Singapore DEA, this agreement provides a case study as to the benefits businesses should expect. These include:

  • Cross border data flows: Businesses operating in both countries are permitted to freely transfer information, including that which is held or generated by financial institutions so long as such transfers meet relevant regulations.
  • Prohibitions on data localisation: Businesses avoid the costs of setting up servers or storing data locally.
  • Open government data: Both countries commit to make government data available to the public in machine-readable formats, helping to facilitate the development of AI technology.
  • Source code, including embedded algorithms and private cryptography keys are protected: Businesses can enter the market feeling confident that they will not be required to transfer propriety information.
  • Digital trading systems: Facilitating common and interoperable systems for e-payments, e-invoicing, e-signatures and other electronic trade documents such as bills of lading. This will enable faster and cheaper transactions for businesses.

Endorsements of the DEA

The UK’s previous digital trade agreement was welcomed by stakeholders with endorsements such as those noted below:

  • Singapore-based broadcaster Channel News Asia hailed the benefits of the agreement as including “end-to-end digital trade such as safe and secure e-payments and paperless trading, … (and) seamless and trusted data flows.”
  • The UK-based Food and Drink Federation suggested the UK-Singapore DEA “will help to reduce costs, complexity and delays at the border, which is particularly important for trade in perishable food and drink due to the limited shelf lives of products.”

What will the UK-Ukraine Digital Trade Agreement cover?

The DTA will be structured around six key areas:

  1. Open and inclusive digital markets
  2. Data flows
  3. Consumer and business safeguards
  4. Digital trading systems
  5. Financial services
  6. Tech partnerships

For each of these areas, the DTA will set out binding rules and standards, as well as areas for the governments of the UK and Ukraine to work together to promote the digital economy.

1) Open and inclusive digital markets

To create open digital markets between the UK and Ukraine, the agreement will ensure digital content is not subject to custom duties, thereby reducing costs for businesses and consumers. The UK and Ukraine will also cooperate on areas such as competition policy and make it easier for small and medium-sized enterprises to participate in the digital economy.

2) Data flows

The agreement will prevent unjustified restrictions to cross border data transfers while also providing requirements for personal data to be protected in both the UK and Ukraine. Efforts will also be made to expand the availability of government information via digital channels, and make it easier for citizens to request information. This section of the agreement will also facilitate innovation through data-sharing projects involving researchers, academics and industry, and potentially create regulatory sandboxes.

3) Consumer and business safeguards

Protections for consumers and businesses will be enhanced by the agreement. The DTA will mandate measures to protect consumers from misleading, fraudulent or unfair trading practices, and from spam and junk mail. Businesses in the IT sector and software owners will also be protected from forced transfer of proprietary cryptographic information and source code. In addition, the agreement will promote deeper cooperation between the UK and Ukraine on cybersecurity including through the development of skills and research across business and academia.

4) Digital trading systems

To enable the growth of digital trade between the UK and Ukraine, the DTA will promote digital contracts, ensuring they are legally enforceable, and other electronic authentication tools. Firms will benefit from new rules on paperless trading to increase the availability of electronic versions of paper forms and ensure customs duties cannot be imposed on digital transactions.

5) Financial services

The DTA will prohibit both the UK and Ukraine from imposing unjust data localisation requirements on financial services firms, while ensuring that regulators have access to essential information and that personal data remains protected. Through the agreement, the UK and Ukraine will also work together to promote the development of new and innovative types of financial services.

6) Tech partnerships

Finally, the DTA will promote collaboration between the UK and Ukraine on frameworks governing artificial intelligence and other emerging technologies and seek greater compatibility between digital identity systems in both countries. The agreement also commits both countries to seek opportunities to convene a “digital economy dialogue”, which will provide an opportunity for tech businesses in both countries to provide input into the development of the digital economy.

The views expressed in any of the articles or other content hosted on this site are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.

Kind regards,

© WTS Consulting LLC, 2022

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